CSR in China: Soft Rise of Consciousness, Long Way to Go...

Corporate Social Responsibility in China… is a vast and ambiguous topic that is quite controversial and can provoke skepticism, irony as much as irritation. Still, despite the outrage about Chinese companies’ social, environmental and ethical practices, a small amount of them attempted to take the route of transparency and responsibility. Under the impulsion of the Communist Party’s 12th plan (2011-15) which placed sustainable development as a “national priority”, these companies assimilated that CSR could help them remain competitive overseas, and provide an answer to the limited resources in their countries. The study of two reports - “Business and Sustainability” in China, and “Emerging Best Practices of Chinese Globalizers” – will help us analyze this soft rise of consciousness and list the various and numerous tracks of potential improvement.

A soft rise of consciousness

According to an international survey led by “The Conference Board” – {{LNK|The Conference Board CEO Challenge 2011 Survey|http://www.conference-board.org/webcasts/ondemand/webcastdetail.cfm?webcastid=2532}} – appreciating the most important challenges currently faced by companies’ rulers, the challenge of Sustainable Development is better ranked in China than in any other countries in the world.

Surprising? Not necessarily. Indeed, CSR is slowly but surely emerging in China.

“With great power comes great responsibility”. Since China joined the WTO ten years ago, a lot of Chinese companies expanded to foreign markets, feeling the weight of responsibilities that is associated to it. Finally aware that current growth is neither socially nor environmentally sustainable, and starting to realize the damage that has been occasioned throughout the years, a growing number of them started to look into CSR…

Some Chinese leaders are therefore attempting to find solutions to solve the issues at stake China will soon have to face, and are essentially motivated by the need to adapt to government switching priorities, but also to benchmark their brands to the eyes of Chinese consumers, and improve their reputation so to retain a skilled work force. They tend to focus their efforts on environmental and governance topics, the most sensitive spheres of operations in China coming as no surprise to be products quality and safety, public health, working conditions, competition and the prevention of corruption.

Stakeholders’ pressure is by the way more and more intense when it comes to topics such as central and local governments, employees, but also media and public opinion via social networks. However, ONGs and clients have far less power than in Occident, although {{LNK|consumers are increasingly demanding for ethical and green brands|http://www.elcamedia.com/blog/?p=85}}. But what is the situation on the field?

A long way to go

No doubt, the few leading companies on the topic have assimilated the stakes and consequences of their actions, as proven in {{LNK|Emerging Best Practices of Chinese Globalizers|http://www.weforum.org/reports/emerging-best-practices-chinese-globalizers-corporate-global-citizenship-challenge}} – a document from the World Economic Forum listing “citizen” Best Practices of the top 100 Chinese companies. But good intentions are sometimes hard to materialize through planned strategies, especially as these companies still constitute a minority.

According to the {{LNK|Business & Sustainability in China|http://www.conference-board.org/publications/publicationdetail.cfm?publicationid=2054}} survey, half the companies that have been surveyed by the Conference Board - 75% of Chinese companies, 25% of foreign companies operating in China - declared they had a concrete strategy to guide their CSR actions in China. Moreover, it revealed that the allocated resources had generally been underestimated when compared to the vast scale of the task: 42% of the companies interviewed declared they had a CSR dedicated employee in their company, and only 32% constituted a dedicated budget. Such gap between strategy and implementation is quite common in Chinese companies.

Here is a particularly representative example, among all: the famous CSR / Sustainability report. Little do Chinese companies comply to it – except for publicly traded companies – and those who do rarely publish verifiable data. Large inadequacies have been noticed in industrial companies that have no environmental data management system, and cannot therefore perform correct reporting and produce exact environmental KPIs regarding materials, energy, water and waste, essentially. Calculation and regulation of GHG emissions is another problem. Despite the ambitious goals listed in the 12th five-year Chinese Plan, no more than 30% of Chinese companies currently measure their carbon emissions, which is probably the best illustration of the difference between aspirations and field reality…

Hence, Chinese companies are globally lagging behind and suffering from a lack of organization, which can be accounted for by three main challenges they have to face:

- Some companies still have troubles appreciating the concept of CSR, and dissociating it from simple philanthropy. The best CSR initiatives are those that benefit both the society and the company, so to be economically sustainable.

- Reluctance to communicate clear and precise information to the public is the second major obstacle. A transparent discussion about a company’s practices should help the company build a coherent strategy, as well as solid partnerships, in order to perform better in the field of CSR.

- The third obstacle is the context, turning out to be less and less favorable to innovation for Chinese companies. Over the past 30 years, we have seen a lot of companies owing their success to copying occidental companies’ practices. Such schemes can neither apply to CSR nor to Chinese stakeholders, whose needs and expectations clearly are different. For that reason, Chinese companies must find out their own models, and most of all, develop a more flexible and innovating way of thinking.

So to answer these challenges, Chinese companies must build {{LNK|a CSR culture for themselves|http://www.forbesindia.com/article/ckgsb/csr-in-china-domestic-enter-prises-outshine-mncs/33200/1}}, based on innovation, sharing information and engaging their stakeholders. This new culture will allow them to catch up, and make up for their lack of experience and knowledge.

Finally, in case you would be willing to go deeper into the subject, I will recommend reading the CSR dedicated Chinese Chamber of Commerce and Industry’s magazine. It was published in 2009, but is full of extremely interesting and relevant case studies: you will find it right below - sorry folks, in French only!